Kevin O'Leary Says Retirees Should Always Do These 6 Things With Money

Much of Kevin O'Leary's advice, from how much you should save for retirement to the best ways to manage your day-to-day finances, assumes you have access to a work-sponsored retirement plan. If you don't, some of his advice still applies, especially when it comes to planning for rising retirement costs.

Here's a summary of six steps O'Leary recommends that retirees take if they want to manage their money well during their golden years.

Pay off high-interest debt before anything else

The Federal Reserve data shows the average credit card interest rate hovers around 21%. At those rates, it's hard to get ahead or create enough cash flow to increase your investing contributions. That's why O'Leary suggests that people pay off high-interest debt as soon as possible. 

In fact, he says one of the hallmarks of setting up a sustainable retirement is to minimize debt, with the goal of avoiding carrying high-interest debt into retirement.

Build multiple retirement income streams beyond Social Security

The Social Security Administration reports that the average check is just over $2,000. That's typically not enough for most retirees to live on, so O'Leary suggests that you add more income streams. O'Leary explains that, at a minimum, having $500,000 in retirement savings can last if you live minimally and don't have any debt. However, a $1.5 million retirement minimum can provide a good quality of life, even if you only live off a small percentage a year.

Make a plan to pay for extra healthcare expenses in retirement

Unfortunately, qualifying for Medicare at age 65 doesn't mean that all of your healthcare costs will be covered for life. O'Leary says that many people are incredibly unprepared for the high cost of healthcare in their later years.

Fidelity recently updated its healthcare cost research, and data shows that retirees 65 and up will spend an average of $185,500 on healthcare. That's a high cost that many retirees are not prepared to pay. Additionally, healthcare costs may be even higher as you reach your 80s and 90s if you require long-term or specialized care.

Keep an emergency cash reserve to avoid selling investments at a loss

O'Leary suggests that everyone, whether they're retired or not, keep a three- to six-month emergency fund on hand for unexpected costs. That way, you can protect your nest egg by avoiding withdrawing money in a down market. With a cash cushion, you can live off your savings and wait to withdraw from your retirement account until the market recovers. This can help in a variety of circumstances, whether you have to make an unexpected or expensive home repair or start to have serious health issues.

O'Leary says discipline is the key to building wealth

O'Leary says that building wealth often comes down to discipline. Rather than investing on autopilot and forgetting to check investment fees, O'Leary says to track your spending closely, stick to a detailed budget, and take the time to truly understand your investments. He also recommends reviewing your portfolio regularly to ensure you're on track for retirement, paying close attention to the fees you're paying.

Increase your cash flow as much as possible

Ultimately, using a combination of discipline, thoughtful spending, and consistent investing can help people prepare for retirement. The goal, according to O'Leary, is to ensure you have enough cash flow to prepare for retirement. Then, once you're in retirement, avoiding debt and managing your budget is still important. 

For example, he says that people tend to spend more than they should, like going out to eat when they don't have a large income. However, staying on top of your spending and sticking to a budget can help ensure you have enough extra cash flow to pay down debt, save, and invest more.

Make an appointment with a financial planner, even if you're already retired

If you're not sure whether you're on track for retirement or whether you'll be able to stay retired if you already stopped working, make an appointment with a financial planner. They can look at your retirement income, your expenses, and your healthcare costs and make suggestions that would be in your best interest. Sometimes, getting personalized advice can help more than taking broad suggestions like the ones above.

Bottom line

If you have already stopped working and you want to free up your retirement budget, the tips above from millionaire and Shark Tank star Kevin O'Leary can help. Many of his tips are straightforward pieces of advice that would work for many people, regardless of their portfolio size. 

Ultimately, what's important, according to O'Leary, is increasing awareness about your finances, making a plan for your retirement money, and then having the discipline to stick to it.

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